Red Tape Challenge - useful tool or good spin?

By Josh Hall

Last week, with much fanfare, the government launched a new initiative
designed to reduce the regulatory burden on businesses.

The Red Tape Challenge is a fundamental part of the coalition’s drive to
cut regulation that it sees as damaging for business growth. But is the
initiative really good for business, or is it spin? Or even worse, could
it be dangerous?

What is the Red Tape Challenge?

The Red Tape Challenge is part of the government’s efforts to reduce
business regulation. It is a website (or rather, a part of the Cabinet
Office website) that gives business owners and the public the
opportunity to comment on existing regulations.

Every few weeks, the government invites opinions on regulations relating
to a certain industry or sector. Currently, for example, visitors can
comment on regulation relating to the retail sector. Within that sector,
the government invites users to comment on specific regulations. You can
do this as an individual, or on behalf of a business.

The commenting process is very similar to that of a blog. You leave your
name and your comment, and the responses are all published at the bottom
of the page. In the next few weeks the government will be seeking
opinions on regulations affecting hospitality, road transportation,
fisheries, and manufacturing.

The government will attempt to cover 21,000 regulations during the
challenge, but it has said that it will give priority to rules “that we
know place the biggest burdens on businesses and society.” The exercise
will run until 2013.

What happens next?

The government has said that it will consider the responses it receives,
and act accordingly. It has previously said that, where businesses
indicate a desire to see specific regulations removed, the onus will be
on ministers to show why the rules should stay. Ministers will have to
consider the responses to each sector’s regulation within three months
and, at the end of this period, their decisions will be looked at by an
‘independent’ reviewer.

After this, there is no set timetable for action. The government has
said that it will act as quickly as possible to remove regulations it
agrees are unnecessary – but in reality, these processes are often time
consuming.

Are there any disadvantages?

There are several very significant potential disadvantages to the Red
Tape Challenge. Your viewpoint on these depends on your viewpoint on
regulation, and on the motives of the government.

The first potential disadvantage is that this could all be one big
marketing exercise for the government. It is certainly not inconceivable
that the government will ignore the views it apparently seeks, and
nothing much will change.

But, while this is certainly a possibility, it seems to be made less
likely by what appears to be a genuine desire on the part of the
government to see regulation cut. This is where the second potential
disadvantage arises. Not all regulation is bad regulation. Previous
governments (including previous Conservative governments) have worked
hard to build regulations that protect the public, consumers, and other
businesses. Sometimes, arguably, they have failed. But that certainly
does not mean that every regulation should be scrapped.

The risk, therefore, is that good regulation gets the chop as a result
of an over-zealous attempt to make life easier for businesses. At worst,
this could make life riskier for consumers – and thereby reduce
confidence in business.

But it is not just consumers that benefit from certain regulations. Some
business groups are concerned that they could see useful so-called ‘red
tape’ cut. The jewellery industry, for example, is worried that the
exercise will result in the scrapping of hallmarking, despite strong
industry support for the system.

The Red Tape Challenge could potentially, therefore, go one of three
ways. It could result in a better, more efficient regulatory system for
both businesses and consumers. It could result in a riskier environment
for consumers. Or it could result in businesses losing valuable support.
The devil will, of course, be in the detail. You can keep up with the
government’s regulatory changes here.